This paper revisits monetary policy in a heterogeneous agent New Keynesian model where agents use an adaptive learning strategy named recursive least square learning in order to form their expectations. Due to the households' finite heterogeneity triggered by idiosyncratic unemployment risk, the...

The stability of the EMS depends crucially on realignment expectations of the market participants. In this paper we discuss how to measure such expectations and how to relate them to economic fundamentals, central bank reputation, and institutional arrangements of the EMS. We find the following...

For oil importers, differences in economic performance after the 1973-74 oil price increase and after the 1979-80 increase can be attributed to a number of factors, including the fact that the 1973-74 oil price increase was unexpected whereas the 1979-80 increase was largely expected. In this...

Recently, there has been a rapid increase in development and use of Transportation Order Applications (TOA) in Indonesia. However, some TOA provider finally close their service because their customer move to the others TOA provider. Therefore, this research is aimed to test the Expectation...

Did innovating firms experience improved business expectations during the pandemic? Using a survey of Indian firms conducted in June 2020, we explore whether innovating into a new product line or adapting to e-commerce platforms improved business outlook. To address the endogeneity of...

There is much debate as to why economics students display more self-interested behavior than other students: whether homo economicus self-select into economics or students are instead “indoctrinated” by economics learning, and whether these effects impact on preferences or beliefs about...

We axiomatize subjective probabilities on finite domains without requiring richness in the outcome space or restrictions on risk preference using Event Exchangeability (Chew and Sagi, 2006), which has been implicit in the prior literature (Savage, 1954; Machina and Schmeidler, 1992; Grant, 1995). In...

In this paper we investigate the effect of a "news-based" policy shock on consumption and investments. To this aim, we construct a new measure of policy announcements, the Policy News Index (PNI), analyzing textual data from the most important Italian business newspaper (Il Sole 24 Ore). To...

Information-theoretic methods have recently been proposed for the simultaneous recovery of investors’ beliefs about future macroeconomic and financial outcomes and their risk preferences from observed asset prices. These methods estimate beliefs and preferences to minimize the statistical...

I provide causal evidence that neighborhood financial expectations affect individual financial expectations. I instrument for neighborhood financial expectations with average financial expectations of neighbors' nonlocal family members. Consistent with social interaction driving this effect, I...